Pearson Candy's bite-size bars just in time for li'l vampires

A candy maker without a bite-size offering for Halloween — now that's scary.

This year, Pearson Candy Co. in St. Paul is making a big play at Halloween, adding a packaging line for bite-size bars that are perfect for trick-or-treaters. It was an important step for Pearson, bringing it up against big peers that have long ruled the candy landscape.

"We're kind of playing catch-up," said Michael Keller, Pearson's chief executive officer. "We're trying to bring the company up to speed with what's happening in the industry."

The maker of the popular Salted Nut Roll, Pearson is the only candy maker of any size in the Twin Cities, offering a stable of brands that have been dear to many locals for 104 years.

While the sweets industry is dominated by Mars, Hershey and Ferrara Candy, there's still room for smaller, more regional players like Pearson, which is expanding its national reach through distribution deals with Walgreens, Wal-Mart and Target. A tour of Pearson's West 7th Street factory is a treat for the nose. In the kitchen, the brisk smell of peppermint oil — essential for Pearson's venerable mint patties — competes with the earthy aroma of peanuts.

Then there's the subtle smell of caramel, the Salted Nut Roll's soul, as it bubbles in a giant kettle.

On the production floor below the kitchen — where caramel, nougat, chocolate and other ingredients become finished candy — Keller shows off new packaging machinery. "This is what allows us to get into Halloween," Keller said.

The new production line is kicking out bite-size bars that weigh 0.5 ounces, a product that has become increasingly important over the past decade, particularly at this time of year.

The bite-size offering disappears in, well, a bite, whereas a mini-candy bar weighs a bit more and is at least a two-biter.

Bite-size has become more popular as parents have become more concerned about their kids' intake of sweets, Keller said. "It's all about portion control."

The bite-size bar isn't the only innovation at Pearson since it was purchased in August 2011 by Brynwood Partners, a Greenwich, Conn.-based private equity firm.

The company launched a pecan take on its flagship Salted Nut Roll 18 months ago, and in June unveiled a peanut butter version.

Then there's the "sea salt caramel" Nut Goodie. "All of the new products have started strongly," Keller said. The Nut Goodie, including the classic maple nougat patty, got a packaging overhaul, too.

The U.S. candy business has been prospering despite a relatively weak economy, posting more than 5 percent annual growth between 2008 and 2013, according to market researcher IBIS World.

A slowdown is forecast for the next five years. Still, "future prospects for the candy production industry are relatively sweet," IBIS World said in a report.

"Pearson is big enough that it's not expected to lose significant customer base to Hershey or Mars," said Jeffrey Cohen, a candy industry analyst at IBIS World. Pearson has fairly distinct products, which helps, too.

The company employs 160 at its St. Paul facility and generates more than $50 million in annual sales. "If we hit our plan for this year, we will have grown [sales] 50 percent in 2½ years," Keller said. That includes revenue from the Bit-O-Honey brand, which Pearson bought earlier this year from Nestlé.

Even without the Bit-O-Honey transaction, sales were up 15 percent during the company's most recent fiscal year, said Keller, a former Dairy Queen chief marketing officer who took Pearson's helm after the Brynwood deal. "Brynwood's investments are leading to growth at Pearson," he said.

Brynwood, which has other candy industry holdings, bought Pearson from Larry Hassler, the company's owner since 1985.

At the time of the sale, Brynwood said it would use Pearson for future candy acquisitions, and that's what happened with the purchase of Bit-O-Honey, a famous but faded brand.

The chewy almond-flavored candy is made in Bloomington, Ill. But Pearson is angling to move production to St. Paul, which would create about 40 new jobs here.

The West 7th Street plant has room for another production line.

Pearson has applied to the state's Minnesota Investment Fund for a forgivable loan to help pay for the Bit-O-Honey move. Keller said the company recently got preliminary approval.

The Minnesota Department of Employment and Economic Development, which administers the investment fund, didn't return calls.

Keller seems optimistic. And he said more deals are possible. "We need to continue to grow where the opportunities present themselves."

Mike Hughlett • 612-673-7003